Delay stirs broader worries about Obama health law

WASHINGTON — The sudden delay of a major part of President Barack Obama’s historic health care overhaul is raising questions about other potential problems lurking in the homestretch.

The requirement that many employers provide coverage is just one part of a complex law. But its one-year postponement has taken administration allies and adversaries alike by surprise.

White House officials said Wednesday that the delay was firm and won’t be extended after a year — and that the overhaul will still be fully implemented by the time Obama leaves office. But the officials, who were not authorized to discuss internal deliberations on the record and spoke only on condition of anonymity, wouldn’t rule out delays or tweaks to other provisions.

The White House action means that some companies that would have offered health insurance next year to avoid fines will not do so now. They’re mainly firms with many low-wage workers, such as restaurants, hotels and temporary staffing companies. The workers, however, will still be able to get coverage. Many may qualify for subsidized insurance through new marketplaces to debut Oct. 1, less than three months away.

The fact that new problems are popping up at this late stage could be a sign of additional troublesome issues ahead. It underscores a recent warning by the Government Accountability Office that the “timely and smooth” rollout of the new insurance markets can’t be guaranteed, partly because much of the technology to run them hasn’t been fully tested.

The timing of the announcement was also widely mentioned.

“It’s understandable that when you announce a change in the law just before the Fourth of July holiday, it raises questions,” said Drew Altman, president of the nonpartisan Kaiser Family Foundation. “Critics will jump on it and use it as more ammunition against the law.” The foundation is a research group that has closely followed the evolution of the health law since it was signed in 2010.

The development was seen as noteworthy by both critics and allies of the new law.

“We are concerned that the delay further erodes the coverage that was envisioned,” said Rich Umbdenstock, president of the American Hospital Association, which has supported the Affordable Care Act.

Just over a week ago, Health and Human Services Secretary Kathleen Sebelius officially launched the 100-day countdown to the new insurance markets. Uninsured Americans in all 50 states and Washington, D.C., will be able to shop online for health plans, and most will get government subsidies to pay their premiums for coverage that takes effect Jan. 1.

In an upbeat talk to reporters, Sebelius gave no inkling the administration was about to slam the brakes on a major provision.

Former HHS Secretary Mike Leavitt says the administration may have come to a point where officials realize they can’t get everything to line up the way it was envisioned in the highly complicated legislation, and they’ll start to delay, change or jettison parts of it.

“The administration is clearly feeling disruptive vibrations and realizes too many things are happening at once,” said Leavitt, who oversaw the initially chaotic launch of the Medicare prescription drug benefit for President George W. Bush. They are “wisely seeking to reorder priorities,” he added.

Leavitt said he sees the delay of the employer requirement as a win-win. On a practical level, it gives employers and government regulators more time to work out difficult issues, and politically the administration appears reasonable by listening to critics at the risk of being criticized by others for the delay. Democrats running for congressional seats next year are probably thankful the issue may be muted.

But Leavitt says he also suspects it won’t be the last surprise.

“As time frames close in, optimism is inevitably confronted by realism,” he said. “This will likely not be the last audible called at the line of scrimmage.”

Perhaps most vulnerable: the highly touted online enrollment capability of the new insurance markets. If that doesn’t perform as advertised, consumers may have to get on the phone to apply, or use the mail.

Administration officials insist the rest of the law is humming along.

White House senior adviser Valerie Jarrett wrote in her blog that the administration is “on target” to open the new health insurance markets and it’s “full steam ahead.” The White House says there are no plans to delay the requirement that virtually all individuals must have health insurance by Jan. 1.

Indeed, the employer requirement was never seen as one of the main engines of Obama’s law, which is eventually expected to provide coverage for 25 million to 30 million uninsured people.

The two parts of the law driving increased coverage are subsidized private insurance for middle-class people who don’t have coverage on the job, and an expansion of Medicaid geared to reaching low-income adults.

The Medicaid expansion already has run into trouble. With more than half the states either rejecting the expansion or still undecided about it, 9.7 million uninsured low-income people may not get the coverage they would be entitled to next year. That would have a much bigger impact than the delay of the employer requirement.

The so-called employer mandate requires companies with 50 or more employees working 30 or more hours a week to offer coverage or face a series of fines. Companies below that size, which account for the vast majority of U.S. businesses, are under no obligation to offer coverage. And, among those subject to the requirement, 95 percent already do provide health benefits, according to the Kaiser Family Foundation.

Still, the 5 percent that don’t offer coverage account for a lot of jobs, said Ed Fensholt of the Lockton Companies, a Kansas City, Mo., benefits consulting firm that advises many medium sized companies. Some firms were looking to limit employee hours to avoid the requirement, while others were trying to stay below the 50-employee mark.

Fensholt said he talked to a client in the restaurant business Wednesday who estimated the one-year delay in the employer requirement will save his company $5 million.

The White House says it hopes many companies will expand coverage next year even if they are not legally required to do so. Fensholt says he doubts that will happen.

“How do you go to your shareholders and say ‘We just spent millions we didn’t have to spend?’” he said.